Daijiworld Media Network – Washington

Washington, Apr 10: The International Monetary Fund (IMF) is set to lower its global growth forecasts in the wake of the ongoing Middle East conflict, warning of long-term economic damage despite a fragile ceasefire.

IMF Managing Director Kristalina Georgieva said the war’s “scarring effects” would weigh heavily on the global economy. “Even in a best-case scenario, there will be no neat and clean return to the status quo,” she noted.

Georgieva cautioned that rising energy prices, infrastructure destruction, disrupted supply chains and declining market confidence would all contribute to weaker-than-expected growth worldwide.

The IMF also projected a sharp rise in financial assistance needs, estimating that between $20 billion and $50 billion may be required to support countries affected by the conflict. Food insecurity is expected to impact at least 45 million people globally.

The remarks were made during the Spring Meetings jointly hosted by the IMF and the World Bank in Washington, where global economic policymakers have gathered to assess the fallout of the crisis.

The conflict, triggered by the US-Israel military action on Iran since February 28, has severely impacted the Middle East region, disrupting supply chains and driving oil prices higher after tensions escalated around the Strait of Hormuz.

Georgieva highlighted that the economic impact would be “asymmetric,” with low-income and energy-importing countries bearing the brunt of the crisis.

Meanwhile, the World Bank has warned of a “serious and immediate economic toll” on the Middle East, projecting regional growth to slow to just 1.8 percent in 2026 — a significant downgrade from earlier estimates.

Global inflation is also expected to rise, driven by surging oil, gas and fertilizer prices along with transportation bottlenecks. A joint meeting involving the IMF, World Bank and the World Food Programme highlighted growing concerns over food security and rising costs.

Further, the IMF is likely to flag increasing government debt levels in its upcoming Fiscal Monitor report, as countries continue to grapple with repeated economic shocks.

A recent IMF analysis noted that economic output in war-affected nations typically drops by around three percent initially and continues to decline over subsequent years, underscoring the prolonged impact of conflicts on global stability.